Brussels (Brussels Morning) The EU economy is expected to grow 3.7% in 2021 and 3.9% in 2022, on course to reach pre-pandemic levels and earlier than predicted in previous forecasts, according to the interim European Economic Forecast for Winter 2011, which European Commissioner Paolo Gentiloni unveiled today.
“The EU is expected to reach its pre-pandemic level of the fourth quarter of 2019 already in the second quarter of 2022, which is earlier than expected last Autumn”, Gentiloni announced, while adding that, despite this, one in four member-states would need longer to recover.
Moreover, no member state is expected to return in 2022 to the growth path projected before the crisis. “In 2022, annual GDP in the EU and the euro area will remain about 4% below what pre-pandemic forecasts had projected,” Gentiloni said.
Trailing China and US
Even though the current growth prediction for the EU economy looks better than expected, it still lags behind average predictions for the global economy, which is expected to grow 5.2% in 2021. The EU will also trail China and the US in its recovery, as China has already returned to pre-pandemic levels of economic activity, while the US is projected to do so by the end of this year.
The pandemic had a diverse range of negative impacts on member states, with EU countries most dependent on tourism hit the hardest in 2020. The worst performers in the past year were Spain (-11%), Greece (-10%), Malta (-9.0%), Croatia (-8.9%) and Italy (-8.8%).
While the EU average economic decline stood at 6.3%, the Baltic and Nordic countries fared much better as evidenced by Lithuania (-0.9%), Poland (-2.8%), Sweden and Estonia (-2.9%) and Finland (-3.1%). Ireland topped the chart, as its economy managed to grow 3% despite the pandemic.
Turn out stronger
Gentiloni praised the decisive response taken by EU governments in controlling the threatened surge of unemployment and providing cushioning measures for employees and companies, noting that national measures with a direct budgetary impact amounted to almost 4% of GDP last year.
The Commissioner welcomed the upcoming economic growth in all EU member states as extremely positive news. “This is the famous light at the end of the tunnel,” Gentiloni declared, noting that economic activity is expected to pick up once vaccinations increase and containment measures relax.
Gentiloni also emphasised that the impact of NextGenerationEU and the Recovery and Resilience Facility had been partially factored into the forecast. “What this means is that the economic recovery in 2021 and 2022 should turn out stronger than projected in this forecast, as the national Recovery and Resilience Plans are implemented,” he said.